Immovable Asset Register: progress update by Department of Public Works

Meeting report

Introduction
The Chairperson welcomed the Department of Public Works (DPW) delegation, which included the Deputy Minister, Mr Jeremy Cronin.  Mr Cronin said he would unfortunately have to leave the meeting almost immediately in order to attend a select committee dealing with the Independent Development Trust.  He apologised for the absence of the Minister and the Director General, who was on sick leave.  The Chairperson said she had received an apology from Mr L Gaehler (UDM), while Mr K Sithole (IFP) would be late.

Immovable Asset Register Enhancement Programme
Mr Peter Chiapasco, Acting Deputy Director General: Asset Investment Management, DPW, said various historic and structural issues had created a continuous lack of clarity on the nature and extent of state immovable assets.  These included the existence of multiple landholding institutions prior to 1994, organisational complexities after 1994, which had led to the loss and mismanagement of some land records and the placing of some state immovable assets (IAs) into private hands, the incomplete surveying of state land and incomplete confirmation of the vesting of the state’s immovable assets.  A major part of the challenge was the sheer size of the IA portfolio in relation to the state’s capacity to manage and maintain it.  There were also a number of legacy transactions which had aggravated the situation.

As a result, a list of what needed to be done had been drawn up.  This involved identifying all registered state IAs, identifying relevant ownership records, determining custodianship of the IAs, desktop and physical verification of the IAs, confirmation of the vesting (or ownership) of all state land, enhancing the state’s immovable asset registers (IARs), augmenting the capacity to manage and maintain the portfolio, identifying state IAs controlled by other parties, and improving the management and reporting requirements for IAs.  An IAR Enhancement Plan was drawn up in late 2011, indicating how these various elements would be dealt with over a three-year period, ending in March 2016.

The DPW and the Department of Rural Development and Land Reform, as the main national custodians, had assumed the collective leading role in the identification and correct classification of government immovable assets, and had created an inter-governmental structure – the Provincial State Land Vesting and Disposal Committee (PSLVDC) – to coordinate IA disposal processes and to confirm the vesting of all state IAs in the national and provincial spheres.  

In 2009, the Cabinet had set up an Inter-Ministerial Committee (IMC) on immovable assets.  In 2011, a national surveying programme was initiated under the leadership of the Chief Surveyor General, with the aim of identifying and surveying all unsurveyed state land and state domestic facilities.  This had practically been completed, except for minor “gap areas” and “slithers” of state land between river bank boundaries.

Mr Chiapasco said the DPW was comfortable with the progress made up to March 2013 – the first stage of the three-year plan -- including the completeness of land parcels, continuous interaction with state land custodians, the appointment of vendors for physical assessments, the development of software, together with clear processes and quality control procedures.  Work was also started on state domestic facilities (SDFs), which are DPW buildings on someone else’s land, such as some police stations in rural areas, for instance.   In the past year, there had been ongoing programmes to keep the IAR constantly updated and verified.  A suite of IAR policies and processes had been prepared, including the accounting side of the IAR, and approval was awaited before the end of this financial year.  A start had been made to applying municipal values to properties, and consideration was being given to linking the correct municipal rates accounts to the IAR.  Operation Take Back (OTB) had been initiated.

The audit of the IAR in 2011-12 had resulted in a disclaimer, but this had improved to a qualified audit in 2012-13.  It was hoped that the improvements made in the valuations through its methodology would result in a clean audit for the current year.

Following integrated discussions with the various custodians, it seemed that state land was made up of 184 011 land parcels, compared to 10 322 for parastatals, 985 782 for municipalities, and 7 423 167 for the private sector.   Of the state’s land parcels, 37 703 fell under the DPW, 25 202 under the DRDLR, 85 503 under the Department of Human Settlements, and 42 693 under the provinces.   Two service providers had embarked on a process of physical verification of the IAs, starting last October, and were expected to finish by the end of March this year, a month later than originally intended.  This was due to the complexity of the reconciliation process, as they were given 42 000 sites to reconcile – one of the providers had 50 teams – but the project was standing at 83% completion, with quality assurance processes completed.

The key elements of Phase 2 of the programme involved the employment of a service provider from the beginning of 2014, and various work streams and resources allocated to the different programmes.  There were teams to manage the physical assessment stream and quality assurance, GRAP compliance in the context of the Property Management Trading Entity (PMTE), and the readiness of iE-Works to accept the IAR-compliant information with a suitable accounting platform.  The vesting of DPW properties by March 2016 presented a formidable target, and current DPW teams were being supplemented to ensure a skills transfer.

So far, there was increased confidence in the data and numbers being reported, as evidenced in the 2013 audit results.  Operation Take Back had identified transactions for investigation and follow-up.  iE-Works was being made available to the Provinces, and a suitably qualified team had been put together to see the enhancement project through to 2016.   Both the national and provincial Public Works departments were working closely together to address key issues, such as the capitalisation of state IAs, vesting and surveying of state land, devolution of IAs to the provinces, compliance of IAR to relevant prescripts, and Operation Bring Back (now called Take Back).  The vesting process was on track insofar as both the national DPW and provinces was concerned.

Mr Chiapasco said that in accordance with the provisions of the 1994 constitution, land parcels in the former TBVC states had been recorded in the IAR of the DRDLR.   However, facilities used by the national government had been recorded in the DPW’s IAR, while those used by provincial governments were recorded by the respective provinces.  These issues were now being resolved. 

The Department of International Relations and Cooperation (DIRCO) had been assigned custodianship of foreign assets in 1999, and were responsible for their management, but the DPW was responsible for their disposal.  There were 13 IAs abroad that had been identified as superfluous to DIRCO’s needs, and were available for disposal.  This would take place in 2014/15, and the proceeds returned to the fiscus.
 
Mr Chiapasco said there was a need to extend the principles of the Government Immovable Asset Management Act (GIAMA) to local government.   GIAMA provided a framework of basic principles in accordance with which national and provincial departments had to manage the IAs they used or controlled in the execution of their mandates.   The Act was structured around the role players involved in the acquisition, operation and disposal (custodians) and use (users) of the state’s IAs, and the management processes within government.  However, the role players and management processes of municipalities differed significantly from national and provincial government.   National and provincial government had to compile an annual user and custodian asset management plan, and submit them to the relevant Treasury to inform annual budget allocations, while local government had no standard institutional delineation between users and custodians of IAs, no separate accounting officers in various departments within a municipality, and was obliged to develop an Integrated Development Plan (IDP) at least every five years.   The shortcomings of the IDP process was that it did not detail a specific IA management planning process, and did not make it mandatory, as was the case with GIAMA.  DPW had renewed discussions with the Department of Cooperative Governance regarding the optimal approach and timeline to extend the principles of GIAMA to local government.  The objective was to reach agreement on specific objectives, commencing in 2014/15.

Use of Geographic Information System technology
The Committee was then given a demonstration on how the use of Geographic Information System (GIS) software and technology had enabled the DPW to consistently improve and maintain its IAR.  Members were shown the GIS mapping capability, with police stations being mapped across the entire country, and the ability to superimpose layers on GIS in order to identify properties in physical assessments.   Surveyor General diagrams could be geo-referenced to identify properties during physical verification.  Asset footprints could be created to determine the square meterage of land and buildings.  The result was much improved data in the IAR, compared to previous methods.

Discussion
Members responded with enthusiasm to the demonstration, with the Chairperson saying this was the sort of development the Committee wanted to see – and wondering why it had taken the Department so long.  Her sentiments were echoed by Ms A Dreyer (DA), who said she had “googled” her iPad to look at an example in Barkley West, and thanks to the wonderful modern technology, she had been able to see exactly what it looked like.

The Chairperson said she needed clarification on who owned the rivers in South Africa.  If the government did not own them, then anyone could divert the water into their own dams.

Mr Chiapasco said he had received clarification from the Chief Surveyor General in the DRDLR.  Ownership of the water component of rivers was vested in the state.  However, the user rights to the water were vested in the state, the general public and owners of the abutting land, depending on where the water was.  He gave a technical explanation of cadastral rights related to boundaries and ownership of river beds – but not the water above it.  

The Chairperson asked for a copy of this information to be supplied to the Committee, as it was too technical to be dealt with in the meeting.

Ms N Ngcengwane (ANC) asked, if there were mineral deposits in the river, who did they belong to?

Mr Chiapasco said he could not give a definitive answer.  He would consult with the authorities and provide a written answer to the Committee.

Ms Dreyer asked why there were so many more land parcels in KwaZulu-Natal (9 387) for vesting than any other province.

Mr Chiapasco surmised that the reason could be historical and related to the country’s heritage.  If required, he would research the matter and report back.

Ms N Madlala (ANC) asked how many DPW buildings there were on other peoples’ land, defined as state domestic facilities (SDFs).   How would the Operation Take Back be conducted?  How many land parcels were linked to the DPW and DRDLR in the TBVC states?  Where were South Africa’s IAs abroad actually located?

Mr Chiapasco said that approximately 5 000 SDFs had been identified as part of the reconciliation process, and this would be confirmed during phase two of the exercise.

He explained that Operation Bring Back had been conceived in 2011 as an “honesty programme,” whereby people could voluntarily return land taken from the state, without fear of prosecution.  However, it was never launched because of changes within the DPW, and the focus was changed to see what land actually belonged to the state, so that it could claim back what rightfully belonged to it.   The name was changed to Operation Take Back.

The Chairperson asked if this meant land was taken away without any negotiation?

Mr Chiapasco said the Department’s position had been that one could not rely on the willingness of people to return land, and that it had a responsibility, as custodian of the state’s assets, to take back the property that belonged to the people of South Africa.   The correct legal process would be followed.

The Chairperson was adamant that the term “take back” was very rude, particularly in her home language, and recommended that a more diplomatic term should be used.

Mr Chiapasco said he appreciated the Chairperson’s comments.  The connotation of the term did seem to be inappropriate, and this would be taken into account in the future development of the programme.

Regarding the breakdown of land parcels in the TBVC states, he said the Department had not yet focused on this specific sector, but they could be made available to the Committee.

The Chairperson asked if the presentation had covered the aspect of underground assets.  Were they a national or municipal competency?  In the past, Committee had asked if the DPW was able to detect assets underground, and had even suggested it might consider using military land mine detection equipment.

Mr Chiapasco said the figures in the presentation related to the assets of the Public Works “family.”  He would need to research this matter and come back with a proper response, as he did not wish to mislead the Committee.

The Chairperson asked why the answer was not clear.  There were water pipes and electrical cables which were government assets, paid for out of taxes, which were under the ground.  Surely the government needed to know where they were?

Mr Chiapasco said the DPW had assisted other entities, such as the Rand Water Board, when they need to traverse DPW land to lay pipes, and a servitude is registered.  The servitude is then recorded in the Water Board’s asset register.   In the case of electric cables, the servitude would be registered in Escom’s asset register.  The DPW did have a list of all these servitudes.

An immovable asset management policy had been drafted for the Property Management Trading Entity, and was currently being circulated for approval.  The target for final approval was the end of the financial year.

There were a number of South Africa IAs abroad which were awaiting disposal.  These included a parking garage in Paris, the formal official residence in Germany, eight houses in Namibia, and official residences in Funchal, Madeira, and Zurich.  In terms of the reconciliation, DIRCO managed and controlled the assets, but when the assets became superfluous, they called on the DPW to dispose of them.

The Chairperson asked whether the problems involved in the sale of five houses in Namibia had been resolved.

Mr Chiapasco said 13 houses had originally been involved, and had been put out to tender.  Bids had been received, but eight of the buyers could not come up with confirmation of funding when guarantees were called for.  He understood that the other five houses had been sold, conveyancing was complete, and payment had been made.  He needed to confirm this.

Ms N November (ANC) referred to challenges such as the unprocessed legacy transactions which had resulted in sales or transferred being incorrectly processed, or not updated correctly on deeds, and asked how this had impacted on the accuracy of the register.

Mr Chiapasco said one of the fields in the old Property Management Information System (PMIS) was known as “archived properties.”  Phase Two of the reconciliation process would be looking at this field to ensure that properties had been appropriately transferred and properly conveyanced.  Any irregularities would be investigated.

Ms Ngcengwane asked whether the employment of two service providers would result in a skills transfer within the DPW.

Mr Chiapasco replied that the service providers were out in the field, verifying the information that was being placed before the Committee.   They were in regular contact with DPW officials at all levels during this process, and skills transfer was taking place.

Mr N Magubane (ANC) asked whether land parcels were being vested individually, or on a bulk basis.

Mr Chiapasco said the DPW would not be able to meet its 2016 deadline if it were to operate one a one-by-one basis, and that it was therefore being handled on a bulk basis.

Mr K Sithole (IFP) asked if the Inter-Ministerial Committee on Immovable Assets had been of assistance to the Department.

Mr Chiapasco said robust interaction between members of the IMC, National Treasury, the DRDLD and DPW had certainly assisted the Department.

Immovable Asset Condition Assessment Guideline
Mr Chiapasco said GIAMA required custodians to conduct periodic condition assessments of their IAs, so the DPW was leading the development of a guideline to assist national and provincial custodians with their assessments.  It would be submitted to the Public Works MinMec for endorsement, prior to final approval by the Minister of Public Works. 

A standard template had been created, which stipulated the minimum information required when undertaking a condition assessment for general buildings.  A five-stage process – initiation, planning, implementation, monitoring and controlling, and closing – would result in a report on the results of the condition assessment exercise.  The report would enable the rating of buildings in accordance with desired standards, development of an itemised maintenance schedule, a cost estimate for remdial work, a report on longer maintenance needs, future budget requirements, future maintenance plans and a budget allocation for future maintenance.

There were no questions from Members.

The Chairperson thanked the DPW for the presentation, and adjourned the meeting.